By using this website, you consent to our use of cookies. For more information on cookies see our Cookie Policy.

Ukraine bailout agreement expected today

Concerns that Kiev is running out of foreign currency

Thu, Mar 27, 2014, 01:02

A composite Ukrainian and Crimean flag signed by citizens. Securing the IMF deal will be a significant boost for Ukraine’s government as it battles to stabilise the country’s economy, while Russian tanks mass on its borders.

The International Monetary Fund is expected to announce a rescue package for Ukraine of about $15 billion (€10.9 billion) as early as today in hopes that the initial aid payments could be made by the end of April, according to officials involved in the negotiations.

The programme, which will come in a traditional IMF bailout known as a “standby arrangement”, is being rushed to the fund’s board because of concerns Kiev is running out of foreign currency reserves.

Securing the IMF deal will be a significant boost for Ukraine’s government as it battles to stabilise the country’s economy, while Russian tanks mass on its borders. Foreign exchange reserves have fallen to barely two months’ import cover, and the finance ministry warned this week it expected the economy to contract by at least 3 per cent this year.

The fund had been considering a quick infusion of $1 billion through its “rapid financing instrument”, but EU and US loans intended to be disbursed alongside the quick IMF aid were not coming quickly enough, officials said.

Rescue packageInstead, the IMF was hoping to agree the entire bailout package with Ukrainian prime minister Arseniy Yatseniuk by the end of yesterday and to announce the deal this morning.

A package of $10 billion to $15 billion would be less than the $15 billion to $20 billion that Ukrainian finance minister Oleksandr Shlapak said the country was seeking, although other nations are expected to contribute. A fund rescue package will also unlock significant funding from other sources.
– (Copyright The Financial Times Limited 2014)